• Sumitomo Mitsui Financial Group’s latest Japan outlook kept its baseline view that Middle East turmoil will not derail the economy, projecting real GDP growth of 0.7% in FY26 and 0.9% in FY27.
• The FY26 real GDP forecast was cut by 0.5 percentage point from the March 10 view, citing a temporary slowdown in capital spending and demand tied to the conflict.
• Nominal GDP was forecast to rise 3% in FY26 and 3.7% in FY27, implying resilient price and income dynamics even as growth cools.
• Japan’s January–March 2026 real GDP grew 2.1% quarter-on-quarter annualized, beating a 1.7% consensus, supported by exports, consumption, and public investment.
• A supplementary budget aimed at offsetting inflation was estimated at around JPY 3 trillion, with limited expected macro lift due to its price-relief focus and weak household sentiment.

Disclaimer: This news brief was created by Public Technologies (PUBT) using generative artificial intelligence. While PUBT strives to provide accurate and timely information, this AI-generated content is for informational purposes only and should not be interpreted as financial, investment, or legal advice. Sumitomo Mitsui Financial Group Inc. published the original content used to generate this news brief on May 22, 2026, and is solely responsible for the information contained therein.